2 May 2017

Mega media merger unlikely to get approval

10:32 am on 2 May 2017

A mega-merger to unite the country's two biggest media groups will likely get the thumbs down from regulators, says a competition law specialist.

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Photo: RNZ

The Commerce Commission will tomorrow deliver its delayed decision on the proposed Fairfax New Zealand-NZME merger to create the country's biggest media conglomerate.

The regulator gave an initial thumbs down to the proposal last November because it believed the enlarged media company would have too much market power in areas such as advertising, and too much control over media outlets in New Zealand, which would reduce the "plurality" of voices.

Competition law specialist Andy Glenie, of Anderson Creagh Lai, said he did not think the Commission will change its mind.

"My sense based on what I've seen to date is there isn't a strong basis for the transaction to go ahead. I'm expecting the Commission to say no again to the deal."

The companies have argued that a rapidly changing media market driven by digital technology is eroding the economics of their businesses and they need to merge to survive in the long term.

They have said the greater issue is the emergence of Facebook and Google as news competitors, and if the merger is knocked back they will be forced to significantly reduce their investment in front-line journalism, which would include regional and community reporting.

Mr Glenie said if the merger was refused then the companies could appeal to the High Court on the ground that the Commerce Commission did not apply the law properly, which would likely become a drawn legal process. Similarly, if the merger was approved then anyone who formally objected could also appeal.

"It may be the parties just throw up their hands and say 'we've had enough we want to get on with our lives' ... it will come down to how much they want to push through with this marriage."

The Australian-based Fairfax has confirmed that it has had an unsolicited offer its New Zealand assets, with speculation that it was from a private equity fund offering more than $100 million.

The Commerce Commission has already shown its teeth this year, having turned down a bid by pay television operator Sky TV and telecommunications concern Vodafone to merge, saying they would have had too much market dominance.

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